A Premium Only Plan, or POP, allows employees to make contributions to their group, dental, life and disability insurance cost before taxes are calculated. Under Section 125 of the Internal Revenue Code, employees save FICA, federal income tax, and in most cases, state income tax on their health insurance deductions with every paycheck.
You can save, too, because eligible businesses do not pay FICA matches or FUTA tax on employee medical deductions. In about half of the states, these contributions may be exempt from SUTA. For many small to medium-sized companies, the savings can be impressive.